When to Evaluate a Holding Company: Structure, Benefits, and Implications for SMEs
- Feb 18
- 4 min read
Over the course of its life, a business changes. The corporate structure changes, its objectives change, the balance of ownership changes, and the need for asset protection changes. Many Italian SMEs, despite growing over time, maintain an original corporate structure that is ill-suited to the new phase of their business .
Establishing a holding company is one solution that, if properly evaluated, can offer greater solidity, control, and long-term planning capabilities. It's not an automatic choice, nor a "tax shortcut," but rather a tool that must be integrated into a comprehensive vision , taking into account financial, fiscal, management, and relational factors.
What is a holding company and how is it structured?
The term holding company refers to a company that holds shares in other companies . In the SME sector, this often refers to the establishment of a "head" company (usually an LLC) that holds the capital of one or more existing or newly established operating companies.
The holding company can be:
personal , when it is directly controlled by the entrepreneur or by the partners of the operating company;
family , when used to organize the participation of multiple family members;
group , when it is part of a structure consisting of several companies and activities.
The crucial aspect is not just “who controls whom,” but what function the holding company performs and what activities are concentrated there (shareholdings, real estate, brands, etc.).
When it makes sense to evaluate a holding company
Establishing a holding company only makes sense if it meets specific needs. In particular:
When you have multiple businesses operating or you plan to expand into new sectors by opening additional companies.
When you own instrumental properties registered in the name of the operating company, and you want to separate ownership from entrepreneurial risk.
When members have different roles, commitments, or goals and more flexible governance is required.
When you want to distribute profits in different ways among the partners or reinvest the profits in other companies.
In the event of a generational transition : the holding company can facilitate the orderly transmission of shares, managing any imbalances between heirs.
When evaluating extraordinary transactions (sales, entry of investors, takeover of a fund) and a clearer and more autonomous structure is required.
In all these cases, the holding company allows for the introduction of an intermediate level of governance and control , useful for managing risks, flows and strategic choices.
The main advantages (and related conditions)
A well-structured holding company can offer concrete advantages in various respects:
1. Asset protection
Separating real estate or intangible assets (brands, licenses) from the operating company helps limit business risks.
2. Tax efficiency
If the Participation Exemption (PEX) regime is met, capital gains from the sale of shareholdings may benefit from a reduced tax rate. Furthermore, dividends received by the holding company from the investee company may be taxed at a preferential rate (only 5% is included in the IRES tax base, unless specific conditions apply).
3. Governance and member management
The holding company allows for the separation of roles and decision-making weights , facilitating agreements between partners, and managing entries or exits in an orderly manner.
4. Generational planning
The transfer of shares can be regulated with greater flexibility, also allowing for the differentiation of patrimonial and administrative rights.
Important: Any benefit depends on proper planning, documentation, and consistency over time . The Revenue Agency evaluates the substance of transactions, not just the form.
Critical aspects to consider
Like any structural decision, establishing a holding company requires thorough analysis. Among the aspects to consider:
Management costs and compliance charges (financial statements, accounting, consultancy)
Risks of tax duplication or inefficiencies if shareholdings are not structured correctly
Need for financial coordination between the companies involved
Impact on banking relationships and credit lines
Real goals and time horizon of the entrepreneur
In short, holding isn't always necessary. But it can become extremely useful when it's the answer to a complex situation that needs to be managed .
The Rogai & Partners approach
Within the firm, corporate structure analysis is an integral part of every tax, wealth, and strategic planning process . We don't offer pre-packaged models, but rather evaluate the following together with the client:
the current state of the company and the group
the real aims of the reorganization
medium-long term cost-benefits
the tax, corporate and operational implications
the impact on members, governance and family assets
When establishing a holding company is appropriate, the firm supports the client through every phase: analysis, planning, incorporation, statutory adjustments, and relationships with other professionals and the financial administration.
Conclusion
The holding company is not a tool “for large groups”, nor a miracle solution.
It's an organizational and fiscal solution that can provide order, protection, and vision to a business when needs transcend the day-to-day operational dimension.
Evaluating this possibility, from a growth or capital rebalancing perspective, means taking care of the future of your company and the people who lead it .
Contact us for a confidential analysis with the Rogai & Partners team : we'll help you evaluate concrete, sustainable, and tailor-made solutions for your business.
p. Rogai & Partners STP Srl
Accountant Lorenzo Rogai
For any further information, please contact Rogai & Partners Sh.PK and Rogai & Partners stp Srl
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